Brand Extension
Strategists
Why Your Brand Needs to be in China… Now

By: Andy Wang, Brand Director, LMCA Asia

Successful global brands have strong consumer recognition, are authentic and have high awareness worldwide. Normally, these factors have a direct relationship to a brand’s global market position and business success.  It is also essential for a brand to be in the right strategic markets.

Today, there is no bigger market for a brand to establish a strong presence in than China. China has experienced an extraordinary surge in consumer buying power over the past 30 years and continues to grow at an unprecedented rate.

 

With the growth of e-commerce, brands are paying close attention to their marketing efforts – not only because stronger brands command higher profits and larger sales volume, but also because online business has now grown to be nearly 50% of total market share in China for some categories.

 

However, what is the most effective to enter the Chinese market? This is a question of strategic importance for many of Western companies and the brands they sell.

Licensing, now more so than ever, is a great tool to propel your company’s brand ahead in China and on a global scale overall.  For over a decade, international licensing deals have driven growth for Western brands. While some Western brands enjoy strong consumer recognition in the US, Europe and other territories outside of China, they tend to have lower brand awareness in China itself. Beyond growing your brand’s awareness and establishing a viable new revenue source, brand licensing in China can provide quick access to the Asian market and with that, all of the benefits of developing a presence in that region.

 

With China’s steadily growing economy and its continued increase of brand-conscious consumers, the country is now a strong consumption market and a significant opportunity for many  Western brands willing to undertake the required effort to do so.

 

Licensing in China requires a unique blueprint for success. When creating a strategic licensing program, there are key requirements needed to develop an effective brand partnership. They are:

First: a Chinese brand partner needs to have the expertise and bandwidth to service the market. They also must be financially strong and show a solid commitment to the brand owner.

Second: the licensee needs to be extremely allied with the licensing program and the brand they are partnering with. The stronger the relationship between licensee and licensor, the greater the success of the licensing program.

Third: both the licensee and licensor need to control risk and manage the program well.  Every new licensing program should be viewed as a new company. From the organizational structure, to local consumer tastes and local retail environments, to team building, to quality control of new product, to knowledge of guidelines from licensor, and to sometimes quick turnarounds for first-generation product launches, all of these require alignment, risk mitigation and collaboration between licensee and licensor for success. Doing it well or not will directly impact the final success of the licensing program.

So, why should your brand be in China?  Why now?

Not only is there huge potential in China’s licensing market, a flourishing economy, and a large consumer base, but there is also the fast development of many emerging industries in China. The earlier a brand’s involvement and entry into the Chinese market, the more benefits and opportunities they can gain.  

As in many emerging categories and industries in China, there is the lack of a dominant, big and prominent brands. The market is characterized by the presence of a large number of small players and there are no clear visible market leaders with authenticity and strong brand recognition nationwide.  Now is the best time for you to expand your business into China.
Providing your brand service and experience to the local 1.4 billion consumers through licensing not only offers meaningful financial income for your company, but also rapidly promotes your brand’s value and helps achieve leading market position in the global business landscape.

 


Andy Wang, Director of Licensing

Andy@LMCA.net

Andy has over 14 years of business development experience in China across a wide range of industrial and consumer products. His specialties include sales and business development, licensee support and partnership management. Andy holds an MBA from Shanghai University of Finance and Economics.

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Learn more about how LMCA can help expand your brand into China here: LMCA Asia Solutions

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